Question

Budgeting for a Car Payment
A 2-column table has 9 rows. The first column is labeled Monthly expenses with entries rent, utilities phone internet, groceries, entertainment, renters insurance, savings, auto insurance/gas, discretionary spending, total expenditures. The second column is labeled amount budgeted with entries 600, 230, 350, 100, 20, 100, 225, 225, 1,850 dollars.
Your used car payment will be $250 per month. What financial challenge do you now face?

My auto insurance costs more than my renters insurance.
I will spend more on groceries now that I am buying gas.
My savings budget is too high.
My car payment is higher than my discretionary spending.

Answer 1

My car payment is higher than my discretionary spending.

Explanation: The car payment is $250/month but discretionary spending is only $225 — the payment exceeds that category by $25, so you'll need to cut other expenses or increase income to cover it.